Mergers and acquisitions boom in Queensland in 2021 with a 342 per cent increase

The value of Queensland mergers and acquisitions smashed records last year as businesses emerged from the Covid-19 pandemic shutdowns. Check out the big deals.

Electricity and gas supplier Ausnet as the biggest acquisition in Queensland last year.

IT was the year of the mega deal in Queensland with almost $45m in mergers and acquisitions in 2021, a rise of more than 340 per cent on the previous year.

Business advisory firm Pitcher Partners annual Deal Pulse report found the second half of 2021 was the strongest six months on record with 190 deals as businesses recovered from the Covid-19 induced shutdowns.

Pitcher Partners’ Warwick Face said while activity in 2020 was artificially low, activity accelerated at the end of the year which continued in 2021 as the pandemic eased.

“Obviously pent up demand played a role with people wanting to deploy capital,” he said.

The number of deals was up 28 per cent on last year to 337 and volumes up 342 per cent to $44.3bn compared to 2020 which smashed the previous highest result of $18.8bn in 2018.

The three of the biggest deals of the year was Aurizon Holdings $2.35bn purchase of One Rail Australia Holdings; EQT Partners $2.3bn purchase of Integrated Clinical Oncology Network from a group including QIC and the acquisition of energy company AusNet by a consortium of investors including Queensland based Sunsuper for $1.9bn.

Overall there were nine transactions over $1bn of which five were in the energy, mining and utilities sector, although deal volumes for that sector fell to 34 compared to 49 in 2020.

Other transactions included the $1.8bn merger between Orocobre and Galaxy Resources to create Allken, a top five lithium chemicals company, while Stanmore Resources paid $1.8bn for an 80 per cent stake in BHP Mitsui Coal.

Stanmore Coal's coal handling and processing plant.

The most active sector in Queensland for the third year in a row was Technology, Media

and Telecommunications with 64 deals, up 68 per cent since 2018, with the largest being Over the Wire Holdings being acquired by Aussie Broadband for $396m.

While consumer led deals, after a large dip in 2020, rose 216 per cent to 54 deals, with a leading transaction being Domino’s Pizza paying $80m for the Domino’s Taiwanese pizza chain run by Formosa international Hotels Corporation.

Leisure also returned to favour up 67 per cent to 30 deals across smaller hotels, travel and gaming hitting $1.7bn due in part to the $338m merger between Apollo Tourism & Leisure and Tourism Holdings. Also of interest was the $248m sale and leaseback of Star’s Treasury Casino and Hotel in the CBD by Charter Hall Group.

Brisbane's Treasury Casino which was bought and leaseback by Charter Hall Group.

While the big deal grabbed attention the mid mark or small cap deals were up 23 per cent on 2020.

Mr Face said Queensland deal-makers, along with consumers have “indeed been having a good time”.

“Despite the impending storm clouds of inflation and labour and supply shortages, M & A deal volumes are not seen to be slowing down, at least in the short term,” he said.

“Interestingly the impending federal election does not seem to be an issue either.

“While the high equity valuations and low interest rate environment that helped support deals may be facing some headwinds, the economic fundamentals that support the market are still strong.”

Mr Face said with the finish to 2021 he expected M & A activity to continue to be strong with transaction numbers to continue to be in the 300 to 330 range.

“With 91 per cent of Queenslanders now fully vaccinated, domestic and international borders back open, and the general mindset transitioning from pandemic to endemic, let’s hope the `don’t stop’ mindset can continue for at least the next little while,” he said.